Digital home opportunity for service providers
The digital home — the coming together of the smart home and the connected home — is a unique opportunity for operators to provide more value to their end-users, create new revenues, and increase customer loyalty. Broadband service providers — whether a telco, MSO, municipality, utility, or any other organization — enjoy trusted relationships with subscribers and presence inside end-users’ homes that gives them a head start when entering this market.
The smart home
Home automation has been around since the 1990s, but has only taken significant hold recently thanks to better wired and wireless technologies, increased user-friendliness, lower costs, and the ubiquity of tablets and smartphones that can act as controllers.
Today, this market is booming. Even back in 2014, Gartner was estimating that there will be hundreds of connected devices in every home by 2020.
The smart home consists of devices that can monitor and control anything and everything inside the home, including temperature and motion sensors, smoke detectors, light switches, kitchen appliances, heart monitors, and security cameras. These devices form the heart of smart home services:
- Home automation. This covers the basic functionality in the home. Things like lights, heating and doors can be controlled remotely. Use cases to make the home self-aware are considered home automation. For example, when the house detects someone coming home, the temperature, lighting and ambient music can be set to that person’s preferences.
- Home security. One interesting use case is motion detection notification with access to a live video stream to let end-users react quickly to a possible intrusion. Alternatively, automatic notifications can be sent to security services or the relevant authorities.
- Home maintenance. Sensors that monitor water levels, potential leaks, or smoke can send notifications when a certain threshold is reached.
- Energy management. Historical energy consumption data from different devices can be used to optimize usage. For example, turning off lights and appliances and lowering the temperature helps end-users save energy and reduces their bills.
- Health monitoring. Real-time monitoring of certain vital indicators coupled with automatic notifications to family members or medical professionals allows the sick or elderly to be cared for at home.
The connected home
The connected home is a prerequisite for smart devices. It provides the necessary high-quality and high-capacity connectivity for devices both inside and outside the home.
- Connectivity towards the network. New fiber and copper ultra-broadband technologies, such as TWDM-PON and G.fast, enable high capacity services towards the network. Speeds of up to 1Gbps are being offered to ensure the best experience.
- Connectivity inside the home. The latest Wi-Fi standard 802.11ac also allows for speeds of up to 1Gbps. It extends ultra-broadband throughout the house for computers, smartphones, and tablets. Other devices such as light switches, door sensors, and cameras may use different wireless technologies — for example ZigBee, Z-Wave, or Bluetooth.
The operator’s opportunity: The Digital Home
The combination of the connected home and the smart home is what we call “the digital home”. With this combination, service providers are uniquely placed to offer full digital home solutions to end-users.
This already gives one big advantage when entering the smart home market, but there are others as well.
The main goal is end-user convenience, but today it’s seen as far too complicated. Many vendors offer a variety of options ranging from all-inclusive specialized installations to a do-it-yourself approach. With so many proprietary implementations, devices, and protocols, there is no simple, guaranteed-to-work, end-to-end solution available on the market.
There are 3 key ways operators can provide the simplicity and convenience that end-users are looking for:
- Service providers already have a device in the customer’s home: the ultra-broadband modem, router or hub. Conversely, 3rd party smart home providers need to add another device. Customers would much rather do without this additional complexity. So, operators have the opportunity to integrate digital home connectivity directly into the existing home hub, such as the Nokia 7368 ISAM ONT G-240WZ-A.
- Service providers already have the operations in place to set-up and support existing customers, from contact centers that take new requests and provide remote technical support, to the experienced field technicians for on-site installations and troubleshooting. These operations can be extended to support digital home devices and services.
- Allowing someone to manage devices and have visibility and access to everything that is happening inside the home requires a great deal of trust. In many cases service providers have had a trusted relationship with customers for years, especially when it comes to billing and data confidentiality.
A history of adding value
Early in the history of telecommunication services, service providers offered just telephony. When the network allowed, they added data and video to create triple-play packages.
Today, triple play is no longer enough in some markets. Adding mobile to create quad play benefits everybody. End users don’t want to go to different vendors to get a full connectivity package and providers can increase loyalty and offer better prices when bundling services.
Whether offered directly or indirectly, digital home services are the next logical step. Since end users can now monitor and manage a wide range of devices wirelessly at home — and even remotely when traveling — it only makes sense for service providers to extend quad play to quint play by adding digital home services.
Monetizing the Digital Home
The smart home market is predicted to grow significantly in the next few years. ABI Research estimates that smart home revenues for service providers will increase at around 60% CAGR over the next 5 years, exceeding $6 billion by 2020. Clearly this is a potentially lucrative new market.
Service providers have 2 options for monetizing digital home services:
- Direct offering. Operators can offer the service directly to the end-user (many around the world already provide some home control and security services). This includes selling the sensors, cameras, and other devices as well as the service for the end-user to use the applications. Service providers can leverage their existing subscriber base where they already have the credibility to offer sensitive services such as surveillance and control of locks.
- Indirect offering. Operators can offer services to other businesses wanting to use the network to better serve their customers. Examples are medical facilities that could offer remote monitoring and e-health services, or supermarkets that want access to the contents of a fridge to help end-users manage their shopping. Again, the service provider’s credibility and subscriber base means they can act as an intermediary to connect 3rd party businesses with the end-user.
Service providers are uniquely placed to remove complexity for customers by providing a unified digital home service that combines comprehensive connectivity with smart home intelligence.